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capital stockthe total amount of capital GOODS (plant, offices, machinery and equipment) currently available to a firm or an economy with which to produce goods and services. The firm's/economy's capital stock requires maintaining by INVESTMENT to replace worn out or obsolete capital items (see DEPRECIATION) but more importantly the size of the capital stock can be increased over time by new investment. Capital formation or accumulation plays a crucial role in expanding the firm's/economy's productive capacity and hence its ability to sustain a high rate of business growth and ECONOMIC GROWTH.
capital stockthe net accumulation of a physical stock of CAPITAL GOODS (buildings, plant, machinery, etc.) by a firm, industry or economy at any one point in time (see POTENTIAL GROSS NATIONAL PRODUCT).
The measurements most frequently used for the value of a country's capital stock are from the NATIONAL INCOME and expenditure statistics. These statistics take private and public expenditure on capital goods and deduct CAPITAL CONSUMPTION (see DEPRECIATION 2) to arrive at net accumulation (which may be positive or negative). The more relevant value of capital stock, from the economist's point of view, is the present value of the stream of income such stock can generate. More broadly, the size of a country's capital stock has an important influence on its rate of ECONOMIC GROWTH. See CAPITAL ACCUMULATION, CAPITAL WIDENING, CAPITAL DEEPENING, DEPRECIATION METHODS, PRODUCTIVITY, CAPITAL-OUTPUT RATIO.